Friday Roundup

Two years ago today, you just can’t make this stuff up, no new trial for Bourke, more offensive use of the FCPA, and ICE is not melting away. It’s all here in the Friday roundup.

Two Years Ago Today

Two years ago today, the Senate held a hearing titled “Examining Enforcement of the Foreign Corrupt Practices Act.” (See here for the full hearing transcript. I had the pleasure to testify at the hearing (see here for my written testimony). I went to Capital Hill without an agenda and on behalf of no one but myself. My testimony represented my beliefs and I was proud of what I said then and I remain proud today.

You Just Can’t Make This Stuff Up

Try as you might, you just can’t make up a better example of the double-standard I frequenlty write about. (See here for numerous other prior posts).

Our FCPA enforcement agencies are bringing enforcement actions against companies for conduct that includes providing $600 bottles of wine, Cartier watches, cameras, kitchen appliances, business suits, and executive education classes to individuals employed by foreign companies that are allegedly state-owned or state-controlled. (These are all allegations found in recent FCPA enforcement actions).

Assistant Attorney General Lanny Breuer recently declared (see here) that “we in the United States are in a unique position to spread the gospel of anti-corruption.”

Against this backdrop, the Wall Street Journal reports (here) that President Obama’s fundraising advisers “have urged the White House to accept corporate donations for his January 2013 inaugural celebration rather than rely exclusively on weary donors who underwrote his $1 billion re-election effort.” Among the justifications put forward by the Obama team according to the Wall Street? The inauguration is “more of a civic event than a partisan political affair.”

Bourke Development

Perhaps this is finally the end of the FCPA enforcement action against Frederick Bourke. As noted in this previous post, in July 2009 Bourke was convicted by a jury for conspiring to pay bribes to Azerbaijan officials. At sentencing, Judge Shira Scheindin (S.D.N.Y.) sentenced Bourke to 366 days in prison, even though she commented that “after years of supervising this case, it’s still not entirely clear to me whether Mr. Bourke is a victim or a crook or a little bit of both.”

An appeal to the Second Circuit followed, largely on knowledge issues. As highlighted in this previous post, in December 2011, the Second Circuit affirmed Bourke’s conviction. Bourke subsequently requested a new trial based on newly discovered evidence relating to alleged perjury of a key trial witness. Judge Scheindin denied Bourke’s request. Bourke then appealed the issue to the Second Circuit.

Earlier this week, in an order (here) the Second Circuit affirmed the trial court decision and rejected Bourke’s request for a new trial. In short, the Second Circuit concluded that Bourke failed to present newly discovered evidence or that the key trial witness in fact committed perjury.

As noted in this Bloomberg article, Bourke’s lawyers plan to ask the Second Circuit to consider the case again.

Offensive Use of the FCPA

Rarely does one hear of offensive use of the FCPA to accomplish a business objective. Usually it is the other way around – the FCPA thwarts a business objective such as acquiring a foreign target, not hiring the foreign agent who says he knows a way to get that lucrative contract, etc.

But with increasing frequency, the FCPA is being used offensively (at least it seems). See this prior post for offensive use of the FCPA in the on-going Wynn-Okada dispute.

Recently Chris Matthews (Wall Street Journal Corruption Currents) has been reporting (here, here, and here) on seemingly offensive use of the FCPA in regards to CEDC Distribution Company, a company that has previously disclosed FCPA scrutiny. (See here for the prior post).

In short, Russian billionaire Roustam Tariko, the founder of CEDC rival Russian Standard vodka brand and CEDC’s largest shareholder, claimed that CEDC executives themselves were the subject of FCPA investigation.

Tariko’s claims prompted CEDC to issue this letter to shareholders that stated, in pertinent part, as follows.

“As you may be aware, earlier this week, Mr. Roustam Tariko, Chairman of Russian Standard, published a letter to CEDC investors that has created anxiety and confusion in the marketplace. What you may not be aware of is that Mr. Tariko’s letter was published less than 48 hours after the CEDC Board voted 5 to 3 (the 3 being Mr. Tariko and his Board designees) against Mr. Tariko’s request that he be given total control over CEDC’s operations and finance. This request follows repeated attempts by Russian Standard to remove the interim CEO. The purpose of this letter is to provide you with (1) an explanation as to why we did not give Mr. Tariko complete control over CEDC last weekend when he asked us to; (2) correct information regarding FCPA matters; (3) a current and accurate picture of the CEDC/RTL Strategic Partnership; and (4) information as to the steps we are taking to address the challenges facing CEDC.”

ICE is Not Melting Away

Previous posts here and here (among others) have the detailed the unsuccessful peition by Instituto Constarricense de Electricidad of Costa Rica (“ICE”) for victim status of Alcatel-Lucent’s wide-ranging bribery scheme. The petition followed the December 2010 announcement that Alcatel-Lucent and certain subsidiaries agreed to resolve a wide-ranging FCPA enforcement action, including conduct in Costa Rica involving payments to ICE officials. Even though ICE acknowledged that “three disloyal and corrupt [ICE] Directors and two disloyal and corrupt employees” were the recipients of Alcatel Lucent’s bribe payments, it nevertheless claimed it was a victim because the corrupt activities of Alcatel-Lucent caused the company “massive losses” and “catastrophic harm.”

After several unsuccessful 11th Circuit appeals, ICE has petitioned the Supreme Court to hears it case (see here). The question presented for review is as follows. “Whether a crime victim who is denied rights conferred by the federal Crime Victims’ Rights Act has a right to directly appeal the denial of those rights.”